Ex-Nissan CEO Ghosn Winds His Way Through Legal Maze
Nissan is faced with a dilemma.
He reported better than expected earnings for the first quarter of the current fiscal year and now expects a small profit for the full year ending next March. Yet the automaker cannot or does not want to extricate itself from the hell of litigation with Carlos Ghosn, its former chief executive.
Ghosn, now 67 and living in exile in Lebanon, gave Wards a second interview to discuss a range of issues, including lawsuits (he’s involved in up to eight, depending on how one counts) and in particular new evidence that has emerged in the pending cases. in Japan, Lebanon and Tennessee.
“We are discovering more and more things all the time,” he said via a Zoom interview from his home in Beirut, “more documents and more people (start) talking about what happened”.
Ghosn’s main goal, of course, remains unchanged: to clear his name.
While it is difficult to determine what constitutes legal gain or loss, the fact that new information is emerging. infiltrating the public domain could support Ghosn’s case. And when you consider where Ghosn was two years ago, awaiting trial and facing an almost certain guilty verdict in Japan’s “hostage justice” system with the prospect of spending most of the rest of his life. life in a Japanese prison, he has clearly made progress.
Ghosn fled Japan two years ago in December in a daring year-end escape. He is currently a fugitive living in Lebanon, his childhood home, which does not have an extradition treaty with Japan. Born in Brazil and of Brazilian, French and Lebanese nationalities, he is currently working to have his name removed from the “red notice” or from the list of “most wanted persons” of Interpol on the grounds that Japan has not transmitted his extradition file to the Lebanese authorities.
For now, he is focusing on two cases – one involving an alleged criminal violation in Lebanon where, on November 19, 2018, minutes after his arrest in Japan, Nissan and its US law firm, Latham & Watkins, reportedly raided his residence in Beirut without a warrant and “stole” (in Ghosn’s words) his computer and personal papers. Separately, they took his former attorney’s legal files, attorney-client privilege-free, warrant-free files that were kept at a Nissan dealership.
The second case is a class action lawsuit filed in federal court in Nashville by Nissan investors who lost money as a result of Ghosn’s ouster.
In the Beirut criminal case, Ghosn says “They broke Lebanese law for sure. They took some archives and documents belonging to me as well as the hard drive of my former lawyer. And they weren’t the police.
Ghosn accuses Nissan to do the same in its apartments in Amsterdam and Rio de Janeiro. He failed to enter his Paris apartment because Ghosn had, by chance, changed the locks two weeks earlier.
In Rio de Janeiro, in an operation originally conceived at Nissan North America Inc. in Franklin, TN, he alleges that Nissan removed content from his personal safe.
“The only place they came with a warrant was my apartment in Tokyo,” he says. And from his Tokyo apartment, prosecutors took business and personal files.
Meanwhile, Ghosn learned the names of several of the people who entered his residences in Beirut, Rio de Janeiro and Amsterdam as well as the names of at least two key witnesses, in Beirut and Rio de Janeiro.
Does it provide for other legal proceedings? “We will. We now have proof of what they did.
The case in Tennessee
The Tennessee case is potentially problematic for Nissan because it is being tried in the United States, Nissan’s second largest market, and thus offers Ghosn a chance to make his story known to the American public, and because the rules for the discovery of evidence in the United States tend to be more towards openness than in Japan.
In fact, Nissan is hit by an avalanche of requests for documents related to the case, as well as the names of key management people that Ghosn’s lawyers want to file. The automaker, we were told, resists every turn and resorts to legal niceties such as: Japanese court rules do not allow disclosure of documents.
In a court order of August 24, the six executives who secretly plotted to remove Ghosn from leadership were first identified in court proceedings and called to testify. Nissan has agreed to allow five of the six to offer written testimonials.
The list includes Hari Nada, the former chief of the CEO’s office and Ghosn’s main accuser who, despite reaching a plea deal admitting to having committed an unspecified crime, is still in the leadership.
Nissan is notably resisting Masakazu Toyoda, a member of the board of directors and a former bureaucrat of the Ministry of Economy, Trade and Industry. The fact that Toyoda was named is significant due to his alleged ties to the government.
The Tennessee case was filed by the Jackson County Employees’ Retirement Assn., Based in southern Michigan, on December 10, 2018, three weeks after Ghosn’s arrest and less than 24 hours after Tokyo prosecutors in halfway around the world got the first of four indictments.
The lawsuit named Nissan and six former board members as accused, including Ghosn; American Greg Kelly, Ghosn’s ally on the Nissan board of directors, still awaiting trial in Japan; Hiroto Saikawa, CEO of Nissan at the time of the arrests of Ghosn and Kelly; and three others including former Nissan CFO Joseph Peter, another American.
The case illustrated Nissan’s inability to break out of the Ghosn era and focus on building cars. Several sources both inside and outside the company, two of whom held managerial positions, say Nissan would be wiser to pay as the costs of the settlement, which will primarily be covered by insurance, are lower than the potential risk of exposure to possible wrongdoing upon discovery of documents.
A source involved in the investigation into the wrongdoing of Nissan management after Ghosn’s arrest warned: “There is a significant risk for Nissan that we may see documents which show Ghosn and Kelly have been put in place. . “
There is a growing body of evidence supporting Ghosn’s claim that he was created. And there is little doubt who pulled him out of leadership as the names of the plotters have moved from media speculation to a US federal court.
In addition, some evidence, including personal papers collected during searches of his residences in Amsterdam, Beirut, Rio de Janeiro and Tokyo, were withheld from the public by Nissan and the Tokyo prosecutor’s office. This evidence could exonerate him and Kelly from at least the first two charges – of hiding 9.3 billion yen ($ 85 million) in retirement income.
It is not clear whether Ghosn will win any of the eight lawsuits he is pursuing on three continents – Europe, North America and Asia. But it’s also not clear whether he will lose, or be ineligible for massive financial damage as more and more facts emerge about the covert investigation and management reshuffle.
And that’s where the problem lies for Nissan, which must focus on rebuilding its business while avoiding distractions, having racked up nearly $ 15 billion in losses since Ghosn’s ouster. Lawsuits are distractions and they are expensive.
Several sources, including again former initiates, tell us Nissan spent more than $ 200 million on legal fees and associated costs – hiring investigators and buying the silence of former employees with nondisclosure agreements – in the six months since Ghosn’s arrest.
Nissan declined Wards’ request to hold management talks, but there’s no question that every dollar spent on lawyers is a dollar not spent on brands or product development.